In Canada, a federal panel recommended that the government should impose strict regulations on packaging and advertising of marijuana when the country legalizes marijuana for recreational use. Canada is on track to federally legalize recreational marijuana by July 2018. Stringent regulation of marijuana packaging and marketing is not unique to Canada.
In the US, the more than 25 states that have legalized marijuana in one way or another have set the bar high in terms of packaging, distribution and promotion of marijuana products, especially for child protection. What may not be obvious to everyone is that stringent regulation around marijuana packaging, advertising and distribution is actually a boon for Kush Bottles Inc (OTCMKTS:KSHB).
In this piece we examine how KSHB is capitalizing on the stringent cannabis packaging regulations to expand its addressable market and increase sales. But before we get into the details, see the action of KSHB’s share price below.
KSHB Daily ChartBusinessFor the readers coming across KSHB for the first time, here’s a brief background on the company for you.KSHB is an American company founded in 2010 and headquartered in Santa Ana, California. The company operates in the packaging sector of the regulated cannabis industry, where it largely serves the business segment. It counts licensed medical and recreational marijuana growers, producers and dispensaries among its customers. KSHB’s customer base has grown steadily as the regulated cannabis market expands globally. As such, KSHB regularly services over 4,000 business customers across North America, South America and Europe. It has facilities in three of the largest cannabis markets in the US, supported a local sales team in every major US cannabis market.The company provides packaging solutions in the forms of bottles, bags, tubes, and containers. KSHB aims to establish itself as the gold standard for responsible and compliant products and services in the regulated cannabis industry.Packaging product for cannabis resale marketAs regulated cannabis market continues to grow, KSHB is moving to meet the rising demand for complaint packaging and branding solutions. On September 7, the company announced the launch of a new FDA-approved cannabis packaging product called Kush Canister.In an industry characterized by stringent regulatory measures, KSHB designed Kush Canister specifically for markets that require child resistant packaging. As such, Kush Canister features a certified child resistant push-top. Kush Canister is designed for safe and secure storage of cannabis products for resale purposes. More than one ounce of cannabis flower can fit in the can, and it can also be used to package edibles and other cannabis products.On the launch of Kush Canister, Nick Kovacevich, co-founder and CEO of KSHB, commented as follow.
“With many states implementing stricter packaging regulations, we've seen increasing demand for compliant cannabis packaging solutions. We are leveraging this relatively untapped opportunity to build a portfolio of valuable brands, IP and products that service this market.”
SourceIn the US alone, annual sales of regulated cannabis products are expected to exceed $20 billion by 2020. Other studies, such as a report by investment bank Cowen and Co, show that the regulated cannabis market could be worth more than $50 billion by 2026 as more states legalize cannabis for not just medical use but also for recreational consumption.Team for custom packaging solutionsSoon after launching Kush Canister for the cannabis reseller market, KSHB went a step further to capitalize on the demand for custom packaging solutions. As more growers, producers and dispensaries are licensed to operate in the regulated cannabis market, competition is increasing in the industry and savvy players are looking for ways to set themselves apart from the competition by adopting innovating packaging and branding for their products.To capitalize on this opportunity, KSHB announced on September 27 that it has created a new team and launched a program to assist cannabis businesses with their packaging needs. The program will focus on developing unique, custom-formed child-resistant packaging systems.With the new professional service program, KSHB is operating from the position that packaging plays a unique role in ensuring a product’s success. For example, packaging not only sets a product apart from its competition, but also helps create a powerful brand and consumer following. So, there is a compelling reason for cannabis businesses that are thirsty for success to look to the way of custom packaging.Concerning custom packaging, Nicholas Kovacevich, the CEO of KSHB, stated that:
"Packaging is a function of both physical distribution as well as advertising. The look, feel and functionality of packaging is an integral component of a product and its brand. It provides protection to the product from being damaged during its handling.”
Source:ConclusionKSHB is not only moving quickly to capitalize on its opportunities, but it is also playing on what one may consider a safer side of the regulated cannabis industry. For example, KSHB neither produces nor sells cannabis products, so it has no expose to risks such as crop failure or product contamination that can lead to unexpected losses.For the quarter ended May 31, 2017, the company’s revenues more than doubled from a year earlier to $4.72 million.We will be updating our subscribers as soon as we know more. For the latest updates on KSHB, sign up below!Disclosure: We have no position in KSHB and have not been compensated for this article.
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